GOOGLE faces €1bn-plus fine' from EU over market dominance

19:42
17 June 2017
592

Google is reportedly facing a record-breaking fine from Brussels of more than €1bn (£875m) over alleged abuse of its market dominance.

EU officials are expected to announce in the coming weeks that the tech giant has been guilty of manipulating its search engine results to favour its new Google Shopping service, which offers price comparisons on products.

The unprecedented sanction, if tabled, follows a seven-year investigation by Brussels. In July last year, the commission had reiterated its belief that the search giant had “abused its dominant position by systematically favouring its comparison shopping service in its search result pages”.

A spokesman for the European commission declined to comment on the size of the fine or the potential timing of any formal announcement. A spokesman for Google was not immediately able to comment.

The Financial Times said the commission was looking at topping the penalty of €1bn handed out to chipmaker Intel in 2009, over its anticompetitive behaviour.

Senior politicians in Paris and Berlin, along with Google’s competitors, have been encouraging Margrethe Vestager, the European commission’s competition commissioner, to take a tough line.

It follows the commission’s decision to force Apple to pay Ireland €13bn in unpaid taxes as a consequence of the regulator finding that the tech giant’s tax regime in Ireland had been a form “illegal state aid”.

A financial sanction for abuse of a monopoly position is capped at a maximum of 10% of the total revenues of the company involved, which in the case of Google’s parent company, Alphabet, was $90bn last year. It is calculated as up to 30% of Google’s shopping revenues multiplied by the number of years of the anti-competitive behaviour.

The company will also have a set time to propose how it intends to operate in future in building its shopping business. If it fails to agree a deal with the commission in that period, the company could be fined up to 5% of average daily turnover for each day of delay.

Since 2000, European regulators have investigated Microsoft, Intel, Apple, Google, Facebook and Amazon, raising claims that Brussels is waging war against Silicon Valley. This is denied by the commission.

Vestager inherited the case from her predecessor, Joaquín Almunia, who reportedly rejected three settlement offers from Google between 2013 and 2014.

On being appointed to her job, Vestager issued a list of charges alleging that Google systematically favoured its own comparison shopping product in its search results. After hearing the company’s response, the commission narrowed the charge list a year later.

Google’s general counsel, Kent Walker, claimed in a blogpost last year that the EU’s case lacked evidence. The company is likely to appeal in the European courts, delaying a resolution to the case for years.

The decision from the regulator would, however, open the way for shopping comparison competitors or customers to file damages claims against Google.

A second investigation being undertaken into Google is considering if it unfairly banned competitors from websites that used its search bar and adverts. The regulator is also examining how Google pays and limits mobile phone providers who use its Android software and Play app store.